HOW MUCH IMPACT DO BANKS AND INSURANCE COMPANIES HAVE ON THE ENVIRONMENT? EVIDENCE FROM ITALY

Abstract

All companies pollute, financial firms included. How much does the financial sector pollute? How much does it impact climate change? This paper contributes to the debate on the relationships between the European financial sector and environmental sustainability. By examining the ESG score — in particular, the environmental indicators — of a sample of Italian banks and insurance companies over the period 2015–2020, the research intends to verify (i) whether financial intermediaries adopt policies and make efforts to reduce the environmental impact of their operations; (ii) the observable trend in the environmental performance of the examined companies and (iii) the existence of a relationship between the environmental performance and the characteristics of the examined companies. The results show an increasing trend in the environmental performance of the examined intermediaries and a wide dissemination of policies aimed at reducing their impact on the environment. According to our analysis, environmental performance is significantly related to company size. The study can be useful for managers and decision-makers in providing an in-depth analysis of the measures adopted to reduce environmental impact. In addition, it can have important repercussions on the financial markets and also for investors in increasing awareness about environmental scores.